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Index
Title Page
Copyright Page
Dedication
Table of Contents
PREFACE
Part One - The Art of Finance (and Why It Matters)
1 - What Is Financial Intelligence?
UNDERSTANDING THE FOUNDATION
UNDERSTANDING THE ART OF FINANCE
UNDERSTANDING FINANCIAL ANALYSIS
ROADBLOCKS TO FINANCIAL INTELLIGENCE
2 - A Primer on the Art of Finance
DISCRETION ABOUT DEPRECIATION
THE MANY METHODS OF VALUATION
Part One - TOOLBOX
FINANCING YOUR BUSINESS
BUILDING A FINANCIAL STAFF
Part Two - The (Many) Peculiarities of the Income Statement
3 - Profit Is an Estimate
A (VERY) LITTLE ACCOUNTING
THE PURPOSE OF THE INCOME STATEMENT
4 - Cracking the Code of the Income Statement
READING AN INCOME STATEMENT
ONE BIG RULE
5 - Revenue
MURKY GUIDELINES
POSSIBILITIES FOR MANIPULATION
6 - Costs and Expenses
COST OF GOODS SOLD OR COST OF SERVICES
OPERATING EXPENSES: WHAT’S NECESSARY?
THE POWER OF DEPRECIATION AND AMORTIZATION
ONE-TIME CHARGES: A YELLOW FLAG
7 - The Many Forms of Profit
GROSS PROFIT: HOW MUCH IS ENOUGH?
OPERATING PROFIT IS A KEY TO HEALTH
NET PROFIT AND HOW TO FIX IT
Part Two - TOOLBOX
UNDERSTANDING VARIANCE
CALCULATING PERCENT OF AND PERCENT CHANGE
Part Three - The Balance Sheet Reveals the Most
8 - Understanding Balance Sheet Basics
SHOWING WHERE THINGS STAND RIGHT NOW
INDIVIDUALS AND BUSINESSES
READING A BALANCE SHEET
9 - Assets
TYPES OF ASSETS
10 - On the Other Side
TYPES OF LIABILITIES
OWNERS’ EQUITY
11 - Why the Balance Sheet Balances
REASONS FOR BALANCE
12 - The Income Statement Affects the Balance Sheet
THE EFFECT OF PROFIT ON EQUITY
AND MANY OTHER EFFECTS
ASSESSING YOUR COMPANY’S HEALTH
Part Three - TOOLBOX
“EMPLOYEES ARE OUR MOST VALUABLE ASSET” (OR ARE THEY?)
EXPENSE? OR CAPITAL EXPENDITURE?
Part Four - Cash Is King
13 - Cash Is a Reality Check
WHY CASH IS KING
14 - Profit ≠ Cash (and You Need Both)
PROFIT WITHOUT CASH
CASH WITHOUT PROFIT
15 - The Language of Cash Flow
TYPES OF CASH FLOW
16 - How Cash Connects with Everything Else
RECONCILING PROFIT AND CASH
A START-UP COMPANY
A REALISTIC COMPANY
17 - Why Cash Matters
THE POWER OF UNDERSTANDING CASH FLOW
Part Four - TOOLBOX
CASH ACCOUNTING
FREE CASH FLOW
Part Five - Ratios: Learning What the Numbers Are Really Telling You
18 - The Power of Ratios
ACCOUNTING TRICKS
ANALYZING RATIOS
19 - Profitability Ratios
GROSS PROFIT MARGIN PERCENTAGE
OPERATING PROFIT MARGIN PERCENTAGE
NET PROFIT MARGIN PERCENTAGE
RETURN ON ASSETS
RETURN ON EQUITY
20 - Leverage Ratios
DEBT-TO-EQUITY
INTEREST COVERAGE
21 - Liquidity Ratios
CURRENT RATIO
QUICK RATIO
22 - Efficiency Ratios
INVENTORY DAYS AND INVENTORY TURNOVER
DAYS SALES OUTSTANDING
DAYS PAYABLE OUTSTANDING
PROPERTY, PLANT, AND EQUIPMENT TURNOVER
TOTAL ASSET TURNOVER
Part Five - TOOLBOX
WHICH RATIOS ARE MOST IMPORTANT TO YOUR BUSINESS?
THE POWER OF PERCENT OF SALES
SUSTAINABLE GROWTH RATE
Part Six - How to Calculate (and Really Understand) Return on Investment
23 - The Building Blocks of ROI
FUTURE VALUE AND PRESENT VALUE
24 - Figuring ROI
ANALYZING CAPITAL EXPENDITURES
LEARNING THE THREE METHODS
COMPARING THE THREE METHODS
Part Six - TOOLBOX
A STEP-BY-STEP GUIDE TO ANALYZING CAPITAL EXPENDITURES
Part Seven - Applied Financial Intelligence: Working Capital Management
25 - The Magic of Managing the Balance Sheet
THE ELEMENTS OF WORKING CAPITAL
26 - Your Balance Sheet Levers
MANAGING DSO
MANAGING INVENTORY
27 - Homing In on Cash Conversion
THE CASH CONVERSION CYCLE
Part Seven - TOOLBOX
WORKING WITH YOUR BANKER
ACCOUNTS RECEIVABLE AGING
Part Eight - Creating a Financially Intelligent Company
28 - Financial Literacy, Transparency, and Your Business’s Performance
BETTER COMPANIES
TAKING IT TO THE TROOPS
29 - Financial Literacy Strategies
TOOLS AND TECHNIQUES
30 - Putting Financial Intelligence to Work
PATHS TO GROWTH
GOING PUBLIC
Part Eight - TOOLBOX
OPEN-BOOK MANAGEMENT
UNDERSTANDING SARBANES-OXLEY
APPENDIX A - Sample Financials
APPENDIX B - Exercises to Build Your Financial Intelligence
APPENDIX C - Under Armour and eBay Financial Statements
NOTES
ACKNOWLEDGMENTS
INDEX
ABOUT THE AUTHORS
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